Slips and falls and customer injury rank among the top ten claims in the real estate industry. General Liability coverage helps pay for legal defense and any settlements an insured faces in these and other types of lawsuits, but often the limits in underlying policies are not enough to cover catastrophic and unforeseen losses that today can run into the millions of dollars. In fact, larger trial verdicts—including in wrongful death lawsuits—are becoming more common. Real Estate Umbrella Liability insurance steps in where the existing primary liability policy limits end, providing extended coverage necessary in our litigious environment. The policy is designed to protect companies from liability claims, including libel, reputational damage, vehicular accidents, or customer injury. But it can only extend coverage on existing policies – if the client doesn’t have the underlying Liability insurance required, Umbrella insurance will not cover the claim.
You can open your clients’ eyes to the need for high-limit Real Estate Umbrella by sharing several claims examples that illustrate the types of real-life liability losses they can potentially face.
- A tenant suffered burns to 60% of his body when the gas fireplace exploded in the apartment he leased from the owner of the building. The tenant was awarded nearly $4.3 million. The building owner had a $1 million GL policy and no Commercial Umbrella insurance.
- A man suffered severe burns from hot water when his landlord failed to install a proper hot water system. He was awarded nearly $9.5 million. The apartment owner had a $5 million Umbrella policy, which, along with his $2 million GL, was not enough to cover the entire judgment.
- A woman suffered severe head injuries after being assaulted in the lobby of an office building. In her lawsuit, she alleged negligent security on the part of the property owners, and was awarded $10 million. The office building carried a $50 million Umbrella policy, and was covered.
- Six people died and nine others were wounded when the sixth-floor balcony of an apartment complex collapsed. Although the partial settlement reached with the property owners and property management company is confidential, this loss illustrates the type of catastrophic event that could upend an insured who isn’t properly covered. In addition to the settlement with the property owner and manager, compensation was also reached with the defendants involved in the design and construction of the balcony.
The amount of coverage an insured requires will depend on several factors, including the nature of the business, the size of the company, number of employees, the value of the real estate investments and the liability limits on any underlying liability policies. Umbrella limits, depending on the program and carriers involved, can go up to $300 million.